'Very good' bid entered for USA Springs

By Bob Sanders

Published: September 21, 2012

The bankruptcy trustee for USA Springs received a "very good" bid that's "in the neighborhood" of $7.5 million for the would-be water bottling company's assets -- a bid good enough to skip a planned auction and negotiate a deal by the end of October, Thomas J. Raftery, the bankruptcy trustee's attorney, told the federal bankruptcy court in Manchester on Thursday.

If a deal is reached, the undisclosed bidder would be designated a stalking horse and, it's hoped, attract higher bids. If not, the price would not pay off the mortgage, much less unsecured creditors. Already there was some jockeying over how limited funds would be distributed.

The bid was the highest of three, said Raftery. Of the other bids, he said, one was "good" and the other "not good at all."

The top bidder's attorney, Joe Foster, declined to give any information about his client, aside from saying that the bidder appeared to be out of state and not involved in the water industry, but it's unclear whether he or she is interested in the land on which the proposed plant would sit or whether there is any interest in renewing the bankrupt USA Springs' hard-won permit to withdraw 300,000 gallons of groundwater a day from the site that sits near the border of Barrington and Nottingham.

USA Springs filed for Chapter 11 bankruptcy protection in the summer of 2008 and spent the next four years trying to find a financier of the plant.

After a $60 million deal with a Swiss lender fell through --- and resulted in the withdrawal of USA Springs' attorneys -- the case was converted to Chapter 7 liquidation, and the court-appointed trustee, Timothy P. Smith, sought to sell off the assets.

"If I had confidence that it would be more than that (about $7.5 million), I wouldn't be here [presenting the deal,]" Raftery said on behalf of Smith.

Roswell Commercial Mortgage lent USA Springs $8.4 million, but claimed -- with interest and penalties - to be owed $13.5 million. At a selling price of $7.5 million, the mortgage company would get $6.15 million, the two towns would receive $557,000 in property taxes, and the trustee would get $806,000.Any remaining money would most likely be claimed attorneys and professionals who were not paid during years of the Chapter 11 bankruptcy.

One of those professionals - USA Springs former attorney Alan Braunstein - objected to the deal. Braunstein - would only be guaranteed a carve-out of $35,000 after nearly four years of work on the case while it was in reorganization. He argued that the trustee could negotiate a better deal if it threatened to renew the litigation of fraudulent transfers begun by the Official Committee of Unsecured Creditors. One of the targets of that litigation would be Roswell.

But Raftery said that he did not have a "warm and fuzzy" feeling that such a case would result in much recovery, a contention seconded by Judge J. Michael Deasy, particularly when it came to Roswell, which put down more than $8 million in "real money" into the plant.

Deasy didn't rule on the other major objection, by Aho Construction of New Ipswich, that its $206,000 lien on the property trumped the Roswell claim, suggesting that the amount was small enough that it would probably be worked out before any October sale. But Deasy would not bless the deal until more parties were given notice.